International Journal of Pure and Applied Management Sciences; 2016

Vol. 1(1)

Role of Corporate Social Responsibility (CSR) in Sustainable Economic

Development in an Era of Globalization

Komal Ahuja* & Dr. M.S. Khan**
*Research Scholar, School for Management Studies, Babasaheb Bhimrao Ambedkar University, (A
Central University) Lucknow.
**Associate Professor & Ex. Head, School for Management Studies, Babasaheb Bhimrao Ambedkar
University, (A Central University) Lucknow.

Date of revised paper submission: 07th June 2016; Date of acceptance: 21st July 2016
Date of publication: 14th August 2016; *First Author / **Corresponding Author; Paper ID: MS16102

Abstract
Corporate Social Responsibility in recent years is playing a pivotal role for bringing all kinds of
development including social and economic and helping in the sustainable growth. CSR means the
way in which business firms integrates environmental, economic and social concerns into their
culture, values, strategy, decision making and operation in an acceptable and transparent manner,
therefore leading to better creation of wealth, better standard of living, better practices in business
organization. In an era of globalization the role of corporate social responsibility has widened
drastically. The main crux of this research paper is to find out the emerging role of corporate social
responsibility in sustainable economic development as well as social development. The findings of the
paper suggest that corporate social responsibility is responsible for economic development provided
the stakeholders show mutual respect for each other. The methods that have been adopted for
reaching to the conclusion are deductive in nature and character. The sources used for collecting data
include books, magazines, journals, periodicals and publications by government agencies,
newspapers. The outcome of the paper if applied properly will definitely help in bringing economic
prosperity on sustainable basis.
Keywords: Sustainable, Globalization, Corporate Social Responsibility, Stake holders, Deductive
1. Introduction
The broad rationale for a new set of ethics for corporate decision making, which
clearly constructs and upholds a organizations social responsibility, arises from the fact that a
business enterprise derives various benefits from society that must require the enterprise to provide
returns to society as well. This establishes the stake of a business organization in good health and well
being of a society of which it is a part. More importantly, in the age of growing emphasis on
transparency and widespread communication, the managers should help their company in

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development of a CSR management and reporting framework. Social responsibility implies a doctrine
which claims that an entity whether it is Private Corporation, government or public organization has a
responsibility to society. CSR is the concept that reduces costs and risks that increases effectiveness
and the efficiency of employees, the brand value and reputation, clarity in the working environment
and improves transparency, of the business house.
The CSR debate has largely revolved around the conduct of multinational
corporations (MNEs) and other large private companies that due to their size have the ability to
significantly influence international and domestic policy and the communities in which they operate.
Central to the debate is the perceived deficiency of international and national law remedies regarding
corporate accountability, particularly the ability of the available regulation to successfully regulate the
corporations conduct in the jurisdictions outside of the corporations home state. Proponents of CSR
reveal that the efficient functioning of the global markets depends on the socially responsible business
conduct.
A general globally accepted definition of CSR does not exist due to the fact that the
concept is still evolving. The language used in relation to CSR is often used interchangeably with
other related topics, such as corporate social investment, corporate sustainability, socially responsible
investment, triple bottom line, and the corporate governance. Proponents of CSR argue that, for a
corporations long term success and profitability, its directors must consider interests of the
shareholders and other corporate stakeholders like consumers, employees and the communities in
which the corporation operates. Current proponents of the CSR maintain there is demonstrated
evidence that corporations that implement relevant and sustainable CSR practices perform better and
attain greater competitive advantage. Twenty years ago, social and environmental issues were for the
activists. Ten years from now, they are similar to be amongst the most critical factors shaping
corporate strategy and government policy. Twenty years ago, we were a lot of local states and
countries, national and regional businesses that were partially connected. Ten years from now, we will
be globally interdependent as individuals and organizations. International investments by MNEs are
central to corporate globalization, which inevitably will lead to a desire to harmonize laws and
reporting practices. MNEs tend to be a focal point with regard to CSR due to their complexity and
size and the fact that they operate in many jurisdiction either directly or via subsidiary entities or in
alliances with other entities. Most attempts to regulate CSR have resulted from the public
international bodies and the non-government organizations (NGOs). Codes of conduct relating to CSR
matters such as bribery, environment and human rights are voluntary and not legally binding,
however, may represent subtle diplomacy by NGOs towards a consensus between governments,
which in turn may be embodied in the national legislation or the universally accepted standards. The
trend in developed nations is to support the reporting of CSR without introducing legislation to

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mandate the CSR practices, instead, the governments appear to be content relying on initiatives
introduced and championed by NGOs such as the OECD, UN and GRI.
2. Global Reporting Initiative
The Global Reporting Initiative (GRI), convened in 1997, was established for
improving the sustainability reporting practices; while achieving comparability, credibility, timeliness,
and verifiability of reported information. The Guidelines, first released in 2000, revised in 2002 with
revision due during 2006, seek to develop globally accepted sustainability reporting guidelines. These
guidelines are voluntary and are used by the organizations in reporting on environmental, economic,
and social dimensions of their activities. The Guidelines are increasingly becoming a universally
accepted mode of harmonizing CSR reporting in various jurisdictions. Approximately 1000
organizations worldwide incorporate the GRIs Guidelines into their reporting.
Corporate social responsibility, also known as corporate responsibility, corporate
citizenship, responsible business, sustainable responsible business, or social corporate performance,
can be defined as Economic, Ethical, Legal, And Discretionary expectations that society has of
organizations at a given point in time. The Economic responsibilities refer to society's expectation
that organizations will produce goods and services those are needed and desired by the customers and
sell those services and goods at a reasonable price. The Legal responsibilities relate to expectation
that organizations will comply with laws set down by the society to govern competition in
marketplace. Organizations have many legal responsibilities governing almost every aspect of their
operations, including product laws and consumer, employment laws and environmental laws.
Regulation in itself is not able to arrange every aspect of a corporation's operations. The Ethical
responsibilities concern to the societal expectations that go beyond the law, like the expectation that
organizations will conduct their affairs in fair and just way. The rise of the ethics training inside the
corporations, some of it is required by the government regulation, is a driver credited with changing
the culture and behavior of corporations. Finally, the Discretionary responsibilities of the
corporations refer to society's expectation, which organizations are good citizens.
A traditional view of corporation suggests that its primary responsibility is to its
stockholders or owners. However, CSR requires companies to accept the broader view of its
responsibilities, which includes not only stockholders, but many other stakeholders as well, such as
suppliers, employees, customers, state, the local community, and federal governments, environmental
groups, etc. Corporate social responsibility is related to, but not similar with, business ethics. Business
ethics usually focuses on moral judgments and behavior of the individuals and groups within the
organizations.

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The rationale for CSR has been articulated in the number of ways. In essence it is about building
businesses, which need healthy markets, economies, and communities.
3. Key Drivers for CSR
The Key Drivers for Corporate Social Responsibility are as follows:
1. Ethical Consumerism:

Over the last two decades can be linked to rise of CSR.

Industrialization in many developing countries is booming as the result of technology and

globalization. Consumers are becoming more aware of social and environmental implications
of their day-to-day consumer decisions and also are beginning to make purchasing decisions
related to their ethical and environmental concerns.
2. Transparency and Trust: Business has low ratings of trust in the public perception. There is
increasing expectation that companies will be the more open, accountable and be prepared to
report publicly on their performance in the environmental and social arenas.
3. Increased Public Expectations of Business: Globally companies are expected to do much
more than merely provide jobs and contribute to economy through employment and taxes. As
corporations pursue growth through globalization, they have encountered new challenges that
impose limits to their growth and potential profits. Global competition forces multinational
corporations to examine their own labor practices, and those of their entire supply chain, from
a CSR perspective.
4. Employee Motivation: A KPMG survey of 1600 of world's largest companies across 16
industrialized countries, including Australia, examined why those are committed to corporate
responsibility and what influenced content of reports. By the survey almost half of world's
largest companies believe employee motivation is the key driver when it comes to social
corporate responsibility.
5. Laws and Regulation - independent mediators, particularly the government, ensuring that
corporations are prevented from harming the broader social good, including people and the
environment. Governments should set the agenda for the social responsibility by the way of
regulation and laws that will allow a business to conduct them responsibly.
6. Crises and their Consequences: Often it takes crisis to precipitate attention to CSR. One of
most active stands against environmental management is CERES Principles that resulted after
Exxon Valdez incident in Alaska, in 1989. Other examples include the lead poisoning paint
used by toy giant Mattel, which required a recall of millions of toys globally and caused
company to initiate new risk management.

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7. Stakeholder Priorities. Increasingly, corporations are motivated to become more socially
responsible since their key stakeholders expect them to understand and address the
community issues and social that is important to them.
Companies have their own ideas related to corporate social responsibility - and how much of a
commitment they make to it. It can range from "going green" to supporting local charities. But
one thing is increasingly clear. It is not choice any longer. CSR extends to bottom line. The
corporate Social Responsibility is no longer optional.
4. Objective of the Study
The main crux of this research paper is;
1. To find out the emerging role of the corporate social responsibility in the sustainable
economic development as well as social development.
2. To know the key drivers of the corporate social responsibility influencing the economic
growth and development.
3. To find out the impact of the corporate social responsibility on social development.
5. Literature Review
In early 1950s & 60s the literature was not represented in CSR discourse. However,
this decade marked a significant growth in attempts to formalize, or more accurately, state what CSR
means (Carroll, 1999). According to Carroll, CSR encompasses the economic, legal, ethical and
discretionary (philanthropic) expectations that society has of organizations at a given point in time.
Some of the most prominent writers during that time were Keith Davis, Joseph W McGuire, William
C Frederick and Clarence C Walton. Frederick wrote that Social responsibility in the final analysis
implies a public posture toward societys economic and human resources and a willingness to see that
those resources are used for broad social ends and not simply for the narrowly circumscribed interests
of private persons and firms (Carroll 1999)
Howard Bowen in 1953 argued that since social institutions shaped economic
outcomes it was to be expected that business firms as an economic outcome of societal interests
should consider the social impact of business activity. According to Bowen, CSR refers to the
obligations of businessmen to pursue those policies to make those decisions or to follow those lines of
relations which are desirable in terms of the objectives and values of our society. CSR implies some
sort of commitment, through corporate policies and action. This operational view of CSR is reflected
in a firms social performance, which can be assessed by how a firm manages its societal
relationships, its social impact and the outcomes of its CSR policies and actions (Wood, 1991).
Carroll 1979 offered the following definition of CSR. The social responsibility of business
encompasses the economic, legal, ethical, and discretionary (or philanthropic) expectations that

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society has of organizations at a given point in time (Turner, 2006). Rosabeth Moss Canter first
introduced a term corporate social innovation in 1999 that argues that firms should use social issues
as a learning laboratory for identifying unmet needs and for developing solutions that create new
markets. Large corporations began to go public about corporate social responsibilities and publish
some of their efforts, but they also made public that any approach to corporate responsibility must
begin with the practical recognition that the corporation must be profitable enough to provide
shareholders a return that will encourage continuation of the investment (Wilson, 2000). Another
trend appearing in the literature is increasing dialogue between stakeholders. Companies are
augmenting their discussions with the labor unions, environmental groups and other relevant
stakeholders and implementation of certification solutions by the corporations, which is establishment
of codes of conduct (Kapstein, 2001), monitoring and reporting. European Commission described
CSR as a concept whereby companies integrate social and environmental concerns in their business
operations and in their interaction with their stakeholders on a voluntary basis. Lee 1997 stated CSR
refers to companys commitment to operate in environmentally and economically sustainable manner,
while acknowledging the interests of the variety of stakeholders and maximizing social, economic and
environmental value. It is holistic concept that means different things to different groups and
stakeholders. Kingston and Wagner 2004 suggest that the leadership on sustainability and CSR are
much important to set the priorities and to ensure that commitments are achieved. CSR has emerged
as a business issue of 21st century and has been studied for more than 50 years. To this day academics
do not have a consensus on its definition (Wood, 1991; Carroll, 1991). Bowens definition of social
responsibility of businessmen was it refers to the obligations of businessmen to pursue those policies
to make the decisions, or to follow those lines of relations those are desirable in terms of objectives
and values of our society (Carroll, 1999). CSR and CSR (or sustainability) reporting are inextricably
intertwined across the organization, and at various levels, impact on strategic planning, risk
management, governance, stakeholder engagement, data collection, decision making and management
systems, performance management, performance measurement, public relations and communications.
Bebbington et al., (2008) use the term CSR reporting, which highlights link between the reporting
function and organizational functions and operations that are concerned and impacted by activities
associated with CSR. The CSR movement was the early response to article published in 1970 by
Friedman stating that social responsibility of business is to increase its profits. Due to Bowens
concern with social responsibility and his leadership role in topic, Bowen should be said as father of
CSR. The main drivers for CSR have been shrinking role of government, demands for greater
disclosure, growing investor pressure, increased the customer interest, competitive labor markets, and
supplier relations. The companies enjoy several benefits such as, lower operating costs, improved
financial performance; increased sales and customer loyalty, enhanced brand image and reputation,
material recyclability, product safety, and greater use of renewable resources etc.

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6. Research Methodology
The methods that have been adopted for reaching to conclusion are deductive in nature and character.
This research is based on the Secondary data and sources used for collecting data include books,
journals, magazines, periodicals newspapers and publications by government agencies,.
7. Findings
The findings of the present paper suggest that corporate social responsibility is
responsible for the economic development provided stakeholders show mutual respect for each other.
Other findings of this study are that CSR is now presented as comprehensive business strategy, arising
mainly from performance considerations and the stakeholder pressure. Companies consider their
interaction with the stakeholders and impact of its business on the society as significant issues. CSR
policies vary with turnover and the profit. Every company defines the CSR in their own ways as per
their needs.
8. Suggestions
Organizations can reexamine their behaviors and will definitely help in bringing the
economic prosperity on sustainable basis and thus for the CSR and sustainable development,
companies must:
1. Implement open information strategy for more transparent information sharing with the
multiple stakeholders.
2. Align and incorporate CSR with the business strategy and integrate it across all operational
functions. Thus, making it easy to invest and not spend funds necessary to achieve its
objectives.
3. Leverage transparency to increase level of engagement of key constituents and the customers.
When these activities are done in the combination, CSR can become the dimension of a companys
successful competitive strategy. Done right, it offers the company to improved relationships with all
of its key constituents, lower costs, more loyal customers, higher revenues and an overall
improvement of the business standing in the society.
9. Conclusion
According to literature, there is growing awareness that business needs to manage its
relationship with wider society. Corporate social responsibility (CSR) can be defined as company's
obligation to pursue policies and goals that are in society's best interests. A socially responsible
company conducts business in ethical manner. In many companies, formal statement or code of ethics
summarizes corporate values and expectations. The practical need for CSR comes from changing
affluence, social expectations, and globalization. Many companies have earned benefits from
engaging in the CSR activities. These include stronger corporate image, brand positioning, market

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share and sales. It increased their ability to retain and attract employees. CSR is becoming leading
principle of the top management and of entrepreneurs. CEOs have long been accountable to varied
group of the employees, stakeholders, and communities, as well as investors. The nature of the
relationships is now changing in ways that significantly affect the corporate performance. In part due
to emergence of Internet and continuing globalization, companies are becoming accountable for the
labor issues and working conditions in the partners operations and also of their own.
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